Causes of The Outbreak of the Eurozone Crises: The Role of the Usa and the European Central Bank Monetary Policy-Reference-Cited by-同舟云学术

Causes of The Outbreak of the Eurozone Crises: The Role of the Usa and the European Central Bank Monetary Policy

Published:2015-06-01 Issue:2 Volume:11 Page:47-63
ISSN:1734-039X
Container-title:e-Finanse
language:en
Short-container-title:

Author:

Białek Natalia¹

Affiliation:

1. University of Information Technology and Management, Poland

Abstract

Abstract This paper argues that the loose monetary policy of two of the world’s most important financial institutions-the U.S. Federal Reserve Board and the European Central Bank-were ultimately responsible for the outburst of global financial crisis of 2008-09. Unusually low interest rates in 2001- 05 compelled investors to engage in high risk endeavors. It also encouraged some governments to finance excessive domestic consumption with foreign loans. Emerging financial bubbles burst first in mortgage markets in the U.S. and subsequently spread to other countries. The paper also reviews other causes of the crisis as discussed in literature. Some of them relate directly to weaknesses inherent in the institutional design of the European Monetary Union (EMU) while others are unique to members of the EMU. It is rather striking that recommended remedies tend not to take into account the policies of the European Central Bank.

Publisher

Walter de Gruyter GmbH

Reference35 articles.

1. Baldwin, R., Gros, D. (2010). Completing the Eurozone Rescue: What More Needs to Be Done?, Centre for Economic Policy Research (CEPR), Londyn.

2. Bednarczyk, J., Bukowski, S., Misla, J. (2009). Współczesny kryzys gospodarczy. Warszawa: CeDeWu.

3. Balcerowicz, L. (2010). Sovereign Bankruptcy in the European Union in the Comparative Perspective. Working Paper Series WP 10-18. Waszyngton: Peterson Institute for International Economics.

4. Berend, I. (2013). Europe in Crisis. Bolt from the Blue?, New York: Routledge.

5. Blanchard, O., Giavazzi, F. (2001). Current Account Deficits in the Euro Area: The End of the Feldstein - Horioka Puzzle? Washington D.C.: Brookings Papers on Economic Activity, Brookings Institution.